Shipping Woes Boost Freight Co-ops
Freight costs are soaring, and that's why many businesses are turning to buying cooperatives to rein in their shipping expenses. "The major hot button is fuel, but there are other things -- the driver shortage, hours of service, and the recent blip in the economy," says John Heckman, president of the Maine-based MESCA cooperative. "The bottom line is that you have fewer trucks shipping more freight."
Established co-ops are booming. MESCA is experiencing the fastest growth in its 25-year history, for example. And new co-ops are popping up all over. The Oregon Association of Nurseries, which represents 1,400 tree growers who hire more than 50,000 refrigerated trailers a year, is among the industry trade groups looking at the co-op model. Average rates for shipping a truckload of trees from Portland to the East Coast jumped to $5,500 in 2004, up from $4,300 in 2003. "We're competing with growers in the Midwest and Northeast," says John Coulter, who heads the group's transportation task force. "To maintain market share we either have to find more trucks or other ways to ship our products."
Joining a co-op is fine, says Jason Seidl, a transportation analyst in Avondale Partners' Philadelphia office, but supply-chain efficiency is more critical to surviving a great market for shippers. "If you streamline your operations so that trucks turn around immediately instead of waiting at your loading docks for an hour," he says, "shipping companies will be more interested in working with you."